John Kinnucan would have probably been a better TV reality star than an expert network analyst. As the founder of Broadband Research LLC, Kinnucan was accused of insider trading by corrupting employees at public companies to divulge corporate secrets, which he in turn passed to hedge fund managers. He was arrested in his home near Portland, OR on February 16th and has been unable to meet the requirements of bail set by a judge. Since then, he was been in jail and was transported via Con-Air across the country to a federal prison holding facility in New York. Today, he is expected to enter a federal courtroom in New York and plead guilty.
When ex-SanDisk Corporation executive, Donald Barneston (37), pled guilty on February 18th of this year, he had been cooperating with authorities and had given them information that he had been passing inside information about his company to Kinnucan. Barneston's cooperation against Kinnucan was the final piece of the puzzle the feds were looking for to nail him. In October 2010, Kinnucan sent an email to his clients that he had been visited by two FBI agents that had asked him to cooperate. He insisted that he refused. It was one mass email you would not have wanted to be on and the beginning of Kinnucan's bizarre behavior.
Kinnucan took to the airwaves on November 23, 2010 for an interview with CNBC's David Faber. During that interview, Kinnucan described "a couple of suits" who jumped out of their car and approached him on his front porch while he was enjoying a glass of wine. It was clear that Kinnucan was no fan of the FBI and that his business had been ruined. He also made it clear that he did not think he was guilty of anything by telling Faber, "...I feel very strongly I have done nothing wrong, my clients have done nothing wrong." In addition to the interview and according to the WSJ, Kinnucan sent out a number of emails to lawyers, journalists and congressional investigators that contained criticism of the federal authorities investigating him. The emails included profanity, ethnic and religious references and graphic acts. He even made a call to prosecutors in New York who were working on his prosecution and left a voice message, "Remember me? The guy who you tried to destroy, you scummy piece of s--t." Sounds to me like he thought he was innocent.
Since then, Kinnucan reported to the court that his home is in foreclosure, he has no money and his family is receiving financial support from friends and family. His wife stated in court documents, related to the SEC seeking forfeiture of Kinnucan's assets, that, "the Kinnucan household is negative and I am struggling." Mrs. Kinnucan had also stated that, "John assured me he was exercising due diligence with respect to operating his business in full compliance with all applicable laws and regulations."
So why the change of heart? Why would a guy so convinced that he did nothing wrong, assured his family he had done nothing wrong and even struck out at people who tried to accuse him of doing something wrong, suddenly plead guilty? Simple, he's broken. He has been in high security prisons, shackled and handcuffed on buses and planes during transport across country, has lost his business, has lost all of his money, his house is in foreclosure and his family is suffering. To the government they believe he's just come to his senses.
Kinnucan will now become yet another statistic in federal cases where 97% are settled through guilty pleas, and are never taken to court. As Supreme Court Justice Anthony Kennedy recently wrote, "Criminal justice today is for the most part a system of pleas, not a system of trials."
Look, Kinnucan has not portrayed himself as a guy you would like to share a beer with, but his plea is supposed to be an acceptance of responsibility and an acknowledgement that he did something wrong. My thought is that he's not being honest with the court or himself...but what choice does he have?
